The UK government has launched a significant support package for small businesses, aiming to tackle the persistent issue of late payments and improve access to finance. This initiative introduces the toughest late payment laws in the G7, empowering the Small Business Commissioner with new enforcement powers and penalties for larger companies that fail to pay their suppliers on time.
Tackling the scourge of late payments
The government’s new Small Business Plan introduces stringent measures to combat late payments, a problem that costs the UK economy an estimated £11 billion annually and leads to the closure of 38 businesses every day. Prime Minister Keir Starmer emphasized the unfairness and exhaustion caused by chasing payments, stating, "It’s time to pay up." The plan includes the toughest late payment laws in the G7, with the Small Business Commissioner gaining new powers to issue fines and conduct spot checks on large firms. Legislation will enforce a 30-day invoice verification period and set maximum payment terms of 60 days, eventually reducing to 45 days. Audit committees in large companies will also be legally required to review payment practices at board level.
Key takeaways
- Toughest late payment laws in the G7 introduced.
- Small Business Commissioner empowered to issue fines and conduct spot checks.
- Maximum payment terms set at 60 days, reducing to 45 days.
- Audit committees to review payment practices at board level.
- £4 billion finance boost for small and medium-sized businesses.
Boosting access to finance
In addition to addressing late payments, the plan includes a substantial £4 billion package to support business growth. This comprises a £1 billion boost for new businesses, offering 69,000 Start-Up Loans with mentoring support. The British Business Bank will receive an additional £3 billion, increasing its guarantee total to £5 billion under the ENABLE programme, which aims to help lenders offer more affordable loans to small businesses. This financial injection is designed to make finance more accessible and affordable for SMEs.
Support for business growth
The Small Business Plan is part of a wider ‘Plan for Change’ aimed at fostering economic growth. It seeks to cut red tape, reduce administrative costs, and improve digital skills for small businesses. Measures to revamp high streets, including licensing reforms and efforts to simplify business openings, are also included. The government is also launching a Business Growth Service, a centralized platform for SMEs to access support, advice, and funding through business.gov.uk. Industry bodies, such as the Federation of Small Businesses and the British Beauty Council, have welcomed the plan, highlighting its potential to create a more stable and supportive environment for small enterprises.
Sources
- Late payment crackdown unveiled in small business plan, Dorset Echo.
- £4 billion into small and medium sized businesses, Rayo.
- [Toughest crackdown on late payments in a generation unveiled in plan to back small businesses
- GOV.UK](https://www.gov.uk/government/news/time-to-pay-up-toughest-crackdown-on-late-payments-in-a-generation-unveiled-in-plan-to-back-small-businesses), GOV.UK.
- Small Business Plan: Government commits to crackdown on late payments and unlock access to finance : The
British Beauty Council, The British Beauty Council. - Businesses set to be fined for late payments under new rules, The Independent.
